Fannie Mae, Freddie and the Financial Crisis: Phil Angelides

http://www.bloomberg.com/news/2011-08-04/fannie-freddie-role-in-the-financial-crisis-commentary-by-phil-angelides.html?cmpid=

Disasters

It’s clear from the FCIC report that these companies were disasters. They had a defective business model, in which profits were privatized and losses socialized -- just like what ultimately happened with most big Wall Street firms. The government-sponsored enterprises used their political power to ward off effective regulation, spending $164 million on lobbying from 1999 to 2008. They ramped up purchases and guarantees of risky mortgages starting in 2005 -- just as the housing market was peaking -- to regain market share, meet investors’ and analysts’ expectations for growth, and ensure lavish compensation for their executives. And their failure has cost taxpayers more than $138 billion to date.